Richard Dickson: Absolutely. Matt, thanks for the question. As mentioned, Gap Inc., gained market share in the quarter year-over-year, which we were very pleased with and that is on the backdrop of a declining overall industry, so even more credit to the strength of these two particular brands at this particular time. It was driven, of course, by Old Navy and Gap as mentioned, and frankly, what we’ve seen in particular is, in Gap Inc., we gained share in literally all segments. The stores gained share driven by Old Navy and Gap and also outerwear, sleep, pants, wovens, tops also gained, kids and baby, as fair to mention, is a really important segment of our business. The Old Navy is the number one kids and baby brand in the U.S. Gap Inc owns 9% of the total market.
We have proven capabilities and brands that resonate in this category. And so over time, it’s also an opportunity for us to accelerate and become even more important of a player in this segment. And as you’ll see, and we evolve our dialogue going forward, we have opportunities in several key categories of strength, Denim, Active, Kids and baby. These will all be really good conversations for us to have as we move forward with our reinvigoration plans.
Katrina O’Connell: And then on gross margin, I just provided guidance for the full year of at least 50 basis points of margin expansion for the full year and at least 100 basis points of expansion for Q1. So let me talk to you a little bit about that. I think as you noted, the rigor we utilized in 2023 drove 380 basis points of expansion year-over-year and as we recaptured a lot of inflation in the back half of the year and we had stronger assortments with the tighter inventories that we had overall, we’re really maintaining that rigor and committed to that as we head into 2024. I think you saw that we ended with 16% less inventory year-over-year. We expect similar inventories coming out of Q1. And so that inventory rigor will allow us to lap the — about 200 basis points of improvement from less promotions last year, this year as we head into the year.
So commodity cost tailwinds in the first-half this year will become largely neutral in the back half. And we are maintaining the rigor so that we can continue to lap last year’s outsized promotion improvement.
Richard Dickson: Thanks, Matt.
Operator: Your next question comes from the line of Michael Binetti from Evercore ISI. Please go ahead.
Michael Binetti: Congrats on a great quarter. I’m just — I guess, in just following a little bit of the math here. You’ve got the merch margins up nicely to 2019 in the quarter, but I don’t know that all the brands are back above 2019 margins. So I know you were asked about merch margins a little while ago. I don’t think all the brands are above. Can you speak through a brand lens where you see the opportunity most on merchandise margin from here and how you’re attacking that opportunity? The plan you gave us today? And then I think if I heard you right, you said that, ROD — you mentioned that ROD would leverage — do you think ROD leverage is excluding the 53rd week this year and maybe the cadence of ROD through the year, please?
Katrina O’Connell: Sure. So I think if I think about the performance for 2024, our outlook includes the fact that our brands are in sort of different places as it relates to brand reinvigoration. And similar to the performance we just put up for 2023, we are seeing early proof points of the brand reinvigoration in Old Navy and Gap. Our two largest brands, which really gives us more confidence in the brand’s ability to be delivering consistent performance going forward. And so, while we don’t guide by brand, we would expect Old Navy and Gap to deliver positive sales in the year. We continue to reset Athleta. I think we talked about that. And as we lap the brand’s missteps made in the prior year, that will weigh on the revenue in the front half of the year.
But we’re encouraged, as we talked about, by the underlying progress in some of the early changes and longer term, we see lots of growth potential at that brand. And then lastly, the recovery of Banana will take more time as the brand works on better execution of the fundamentals. But we don’t disclose margins by brand, we’re just encouraged by the outlook we provided today of overall operating income growth. And we’re just going to continue to use rigor in the middle of the P&L. That will result in the low to mid-teens operating income growth that we gave today on roughly flat sales growth. As it relates to ROD, our principle for ROD generally on the year is that ROD leverages on flat to slightly positive sales. So when you think about excluding the 53rd week, ROD is very slightly deleveraging on the year, and that’s just some dynamics related to the 53rd week.
But that’s how we think about ROD.
Michael Binetti: Thanks lot.
Operator: Your next question comes from the line of Lorraine Hutchinson from Bank of America. Please go ahead.
Lorraine Hutchinson: Thank you. Good afternoon. I wanted to follow up on Bob’s question about marketing. Can you quantify how much you spent on marketing in 2023? And do you have aspirations to reduce this expense going forward or just deploy — redeploy it at current levels?
Richard Dickson: Yes. We don’t disclose how we spend or what we spend on in the context of marketing. We invest in advertising over time. And our ad spend has grown to support our brands as a result of elevated costs. But in general, ultimately, our mission is to drive more effective and more efficient use of our dollars. Marketing dollars are continuing to come down year-over-year and that is a direct function of in more innovative medium metrics that is sort of driving a more innovative approach to how we market. We are continuing to evaluate our marketing comprehensively as part of the brand reinvigoration work as well as part of media efficiency work, whether that results in lower spend in 2024 or better effectiveness of the current spend, we’re going to continue to see how that plays out.
